If an economy grows at an annual rate of 5% of which 3% is deemed to be due to improvement in the productivity of labour and capital combined the remaining ...

If an economy grows at an annual rate of 5% of which 3% is deemed to be due to improvement in the productivity of labour and capital combined the remaining 2% is generally attributed to?

Answer Details

The remaining 2% of the annual growth rate of 5% is generally attributed to technical progress. This refers to advancements in technology and knowledge that contribute to the increase in productivity and efficiency of labor and capital. Technical progress can result from various factors, such as research and development, innovation, and improvements in infrastructure and education. It allows an economy to produce more output using the same or fewer inputs, which leads to economic growth and increased standards of living.